SK Holdings (034730 KS) Five Growth Strategies to Drive up NAV

SK Holdings (034730 KS) Five growth strategies to drive up NAV

Retain Buy and TP of W330,000; Our top pick for 2016 As an operating holding company, SK Holdings is focusing on five key areas it believes Holding companies are essential to ensuring sustainable growth. We believe the company is well positioned to implement its vision given its ample cash flow and ICT capabilities. As the company executes its growth strategies, we expect the value of the operating business and Company Update subsidiary stakes to increase, supporting a potential upward revision in our target price . November 23, 2015 We maintain our Buy call on SK Holdings with a target price of W330,000. Five growth strategies to drive up NAV 1) IT services (in-house): The company is seeking to raise its IT services capabilities to (Maintain) Buy global top-tier levels, using cloud, big data, and IoT technologies. As part of such efforts, the company established a joint venture called FSK Holdings with Taiwanese firm Target Price (12M, W) 330,000 Foxconn (Hon Hai Precision Industry). Through the joint venture (70% owned by Foxconn and 30% by SK Holdings), the company plans to acquire Daiwa Associate Share Price (11/20/15, W) 243,000 Holdings, a Hong Kong-based manufacturer of smar t sensors and parts for the Internet of Things (IoT). Looking forward, we expect the company to gain various opportunities Expected Return 36% related to smart factory projects for Foxconn’s Chongqing plants.

2) ICT security convergence and smart logistics (in-house): The company is aiming to establish a security convergence platform (information security and physical security) OP (15F, Wbn) 1,827 and expand into security devices (sensors, etc.), as well as biometrics- and video Consensus OP (15F, Wbn) - surveillance-related software. The company is also looking to enter the business of smart logistics using big data and IoT. The company will initially focus on bolstering its EPS Growth (15F, %) 2,929.5 capabilities on the back of ca ptive (affiliate) demand until 2016 and then work on Market EPS Growth (15F, %) 21.0 broadening its global presence, especially in China through its partnership with Hon Hai, P/E (15F, x) 3.2 from 2017. Market P/E (15F, x) 11.5 KOSPI 1,989.86 3) Bio/pharmaceuticals (SK Biopharmaceuticals and SK Biotek): SK Group plans to fully integrate its value chain (R&D, manufacturing, and marketing) by 2018. After this, SK Market Cap (Wbn) 17,098 Biopharmaceuticals will consider going public and acquire developers with strong Shares Outstanding (mn) 71 potential. Currently, SK Biopharmaceuticals is focusing its resources on developing Free Float (%) 48.4 central nervous system agents and seeking licensing-out deals with global companies. In particular, the drug company has successfully completed the phase 2b clinical trial for its Foreign Ownership (%) 24.2 lead epilepsy treatment (YKP3089) and is expected to move onto the p hase 3 trial. Beta (12M) 0.87 Assuming manufacturing and sales begin in 2018, we estimate annual revenue to reach 52-Week Low 196,500 W1tr. SK Biotek, which was spun off from SK Biopharmaceuticals in April, manufactures 52-Week High 320,500 and sells active pharmaceutical ingredients (API) and intermediates to multinational drug companies. The company plans to invest W70.1bn to expand its API capacity by (%)(%)(%) 1M1M1M 6M6M6M 12M12M12M 2019 with the aim of increasing its annual revenue to W100bn by 2020. Absolute -10.0 -3.0 11.0 Relative -7.8 4.3 9.2 4) LNG (SK E&S): SK E&S is aiming to integrate its LNG value chain and expand its LNG capacity to 5mn tonnes by 2020. The LNG business enjoys cost advantages due to direct

150 SK Holdings KOSPI access to cheap gas in the US and Australia. SK E&S is also expected to secure new business opportunities in China through partnerships with local companies like Huadian 130 Group and China Gas Holdings. 110 5) Semiconductor module (Essencore) and materials (M&A, JV, etc.): The semiconductor 90 module business (Essencore) aims to achieve W1.5tr in revenue by 2019. The semiconductor materials business is looking to acquire or form a joint venture wit h a 70 11.14 3.15 7.15 11.15 company with global technology in order to tap into the fast-growing materials market.

Daewoo Securities CCo.,o., Ltd. FY (Dec.) 12/11 12/12 12/13 12/14F 12/15F 12/16F Revenue (Wbn) 1,702 2,242 2,302 2,426 41,476 99,362 [Holding Companies/IT Services] OP (Wbn) 176 201 225 272 1,827 5,842

Dae-ro Jeong OP margin (%) 10.3 9.0 9.8 11.2 4.4 5.9 +822-768-4160 NP (Wbn) 438 356 189 127 5,427 1,513 [email protected] EPS (W) 8,765 7,122 3,777 2,546 77,130 21,498 ROE (%) 25.3 15.8 8.4 5.5 41.2 9.3 Yoon-seok Seo +822-768-4127 P/E (x) 13.3 14.5 35.7 83.9 3.2 11.3 [email protected] P/B (x) 2.4 1.9 2.4 3.6 1.3 1.3 Notes: All figures are based on consolidated K-IFRS; NP refers to net profit attributable to controlling interests Source: Company data, KDB Daewoo Securities Research estimates

Analysts who prepared this report are registered as research analysts in Korea but not in any other jurisdiction, including t he U.S. PLEASE SEE ANALYST CERTIFICATIONS AND IMPORTANT DISCLOSURES & DISCLAIMERS IN APPENDIX 1 AT THE END OF REPORT.

November 23, 2015 SK Holdings

TableTableTable 111.1. SK GroupGroup’’’’ssss growth framework Growth areas Related companies Details

- Extend the coverage of IT services, establish overseas footholds through business (1) IT services SK C&C, etc. partnerships, and broaden cloud -based offerings ICT - Security convergence platform (information security and physical security) SK C&C, Infosec, (2) ICT convergence - Expand into security devices (sensors, etc.) as well as biometrics- and video surveillance NSOK, etc. - related software - Integrate the pharmaceuticals value chain, including R& D, manufacturing, and marketing, (3) Bio/ by 2018 SK Biopharmaceuticals pharmaceuticals - Take SK Biopharmaceuticals public in 2018 and acquire drug developers with strong potential - Integrate and expand LNG value chain in the group; expand the capacity of LNG business New to 5mn tonnes by 2020 growth - Benefiting from cost advantages (due to direct access to cheap gas in the US and (4) LNG SK E&S portfolio Australia) and captive demand - Expected to partner with a Chinese firm in the near future to secure new business opportunities

(5) Semiconductor SK C&C, Essencore, SK - Semiconductor module business (Essencore) aims to achieve W1.5tr in revenue by 2019 modules/materials Hynix, etc. - Plans to acquire a firm with global technology to secure stable footing in the market

Source: Company data, KDB Daewoo Securities Research

Figure 111.1. SK GGGroupGrouprouproup’’’’ss corporate governance and current business portfolportfolioio

CheyTae-won and related Chey Chang-won and parties related parties

▶ SKChem’smajor shareholders ▶ SK Holdings’ major 30.9% CheyChang-won14.7% shareholders CheyShin-won0.1% 17.3% CheyTae-won23.4% Treasury shares15.5% CheyGi-won7.5% 99.4% Treasury shares15.7% Infosec SK C&C+SK Holdings 50.0% [034730 KS] Encar SK Chemicals [006120 KS] 10.0% SKSecurities [001510 KS] 28.2%

25.4% 25.2% 33.4%41.8% 39.1% 100% 83.1% 100% 100% 44.5%

SK Telecom SK Innovation SKC SKNetworks SKForest SK Shipping SK E&S SK Biophram SK E&C [017670 KS] [096770 KS] [011790 KS] [001740 KS]

100% 20.1% 48.9%64.5% 83.5% 100% 100% 66.0% 50.0% 44.0% 45.6%

SK SKHynix iRiver UBcare SK Gas SK Broadband Communications SK Telink SKPlanet SK Syntec Initz Entis [000660 KS] [060570 KQ] [032620 KQ] [018670 KS] [066270 KQ] 32.8%

SKD&D [210980 KS]

Source: KDB Daewoo Securities Research

TableTableTable 222.2. SKSKSK HoldingHoldingssss’’’’ major shareholders (%, Wbn) NameNameName Number of shares Ownership ValueValueValue NotesNotesNotes Chey Tae-won 16,465,472 23.4 4,001 Noh So-young 8,616 0.0 2 Chey Gi-won 5,250,000 7.5 1,276 Chey Shin-won 5,736 0.0 1 Total of related parties 21,729,824 30.9 5,280 Best Leap Enterprises 2,450,000 3.5 595 100% subsidiary of Foxconn Holdings Other 31,644,533 45.0 7,690 Total treasury shares 14,535,940 20.7 3,532 SK Holdings’ stake in SK C&C (31.8%) became treasury shares after Original 11,021,664 15.7 2,678 merger Newly acquired 3,514,276 5.0 854 Share buyback completed (9/11/2015 – 11/11/2015) Total number of issued 70,360,297 100.0 17,098 shares Notes: Based on Nov 20 th , 2015 closing price Source: Dart, KDB Daewoo Securities Research

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TableTableTable 333.3. SKSKSK Holdings’ 3Q15 earnings review (Wbn, %) 3Q153Q153Q15 GGGrowthGrowthrowthrowth 3Q143Q143Q14 2Q152Q152Q15 (((Former(Former SSSKSK (((Former(Former SSSKSK Former SSSKSK Former SSSKSKKK

C&C)C&C)C&C) C&C)C&C)C&C) Results C&C Holdings QoQQoQQoQ YoYYoYYoY (Jul(Jul(Jul ---Sep)Sep)Sep) (((AugAugAug ---SepSepSep ))) Revenue 613 678 15,358 679 14,679 2,164.5 2,403.7 Operating profit 71 78 478 75 403 511.8 572.0 Net profit 112 160 4,910 - - 2,976.7 4,295.7 OP margin 11.6 11.5 3.1 11.1 2.7 -8.4 -8.5 Net margin 18.2 23.5 32.0 - - 8.4 13.8 Notes: Net profit attributable to controlling interests; SK Holdings merged with SK C&C on August 3 rd , 2015; 3Q15 results refer to the sum of the former SK C&C’s 3Q results (July-September) and the former SK Holdings’ August and September results Source: KDB Daewoo Securities Research

TableTableTable 444.4. SKSKSK HoldingsHoldings’’’’ quarterly and annual earnings (Wbn) 201420142014 2015F2015F2015F 2016F2016F2016F 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4Q4Q4Q Annual 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4QF4QF4QF Annual Revenue 29,169 27,833 27,967 28,069 110,666 24,035 24,350 23,496 24,798 96,679 99,362 Operating profit 833 837 794 176 2,396 1,144 1,628 1,064 1,194 5,030 5,842 Equity-method income 210 225 299 316 1,050 275 262 243 225 1,005 875 Pretax profit 795 797 794 -1,185 988 1,295 1,590 6,058 643 9,586 5,501 Net profit 513 562 565 -1,243 370 985 1,101 5,825 427 8,339 3,718 Net profit attributable to 225 204 197 ---1,131 ---506 431 384 5,283 149 6,248 1,393 controlling interests Notes: Bargain purchase gains of W4.99tr recognized as other non-operating income in 3Q15 through merger Source: KDB Daewoo Securities Research estimates

TableTableTable 555.5. QQQuarterlyQuarterly and annual earnings of former SK C&C (IT services) and major subsidiarisubsidiarieses (Wbn) 201420142014 2015F2015F2015F 2016F2016F2016F 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4Q4Q4Q Annual 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4QF4QF4QF Annual Revenue 524 608 613 681 2,426 641 678 679 764 2,762 3,289 IT services 294 350 335 390 1,368 313 322 310 405 1,350 1,723 Non-IT 230 258 279 291 1,058 329 356 369 359 1,412 1,566 Distribution (Encar) 171 172 178 159 680 166 170 180 164 679 742 Semiconductor 40 64 75 102 280 144 157 158 162 622 707 modules (Essencore) Security services 19 23 26 30 98 19 28 31 33 112 117 (Infosec) Operating profit 55 66 71 79 272 77 78 75 92 323 797 Source: KDB Daewoo Securities Research estimates

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November 23, 2015 SK Holdings

TableTableTable 666.6. Earnings of SK GroupGroup’’’’ss major consolidated subsidiaries (Wbn) 201420142014 2015F2015F2015F 2016F2016F2016F 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4Q4Q4Q Annual 1Q1Q1Q 2Q2Q2Q 3Q3Q3Q 4QF4QF4QF Annual SKSKSK Innovation Revenue 16,878 16,261 16,609 16,117 65,865 12,046 12,998 12,447 12,036 49,528 51,678 (33.4%) Operating profit 232 -50 49 -463 -231 321 988 364 323 1,995 1,892 OP margin 1.4 -0.3 0.3 -2.9 -0.4 2.7 7.6 2.9 2.7 4.0 3.7

SSSKSK Telecom Revenue 4,202 4,305 4,367 4,289 17,164 4,240 4,256 4,261 4,327 17,084 17,558 (25.2%) Operating profit 252 546 537 490 1,825 403 413 491 507 1,813 2,153 OP margin 6.0 12.7 12.3 11.4 10.6 9.5 9.7 11.5 11.7 10.6 12.3

SKSKSK Networks Revenue 6,089 5,506 5,443 5,370 22,408 4,859 5,160 5,101 5,366 20,486 21,135 (39.1%) Operating profit 41 45 53 62 201 32 38 59 86 216 253 OP margin 0.7 0.8 1.0 1.2 0.9 0.7 0.7 1.2 1.6 1.1 1.2

SKCSKCSKC Revenue 668 746 682 803 2,899 701 632 632 632 2,597 2,690 (42.5%) Operating profit 32 45 36 44 157 61 59 55 53 228 240 OP margin 4.7 6.0 5.3 5.5 5.4 8.8 9.4 8.7 8.4 8.8 8.9

SK E&S Revenue 2,015 1,096 904 1,624 5,639 1,859 879 682 1,608 5,029 5,129 (((100(100100100%)%)%)%) Operating profit 198 94 84 94 470 182 67 23 89 362 373 OP margin 9.8 8.6 9.3 5.8 8.3 9.8 7.7 3.4 5.5 7.2 7.3

Profit from Discontinued 14 -4 27 -23 14 93 -2 0 0 90 0

Operations SKSKSK E&C (((parent(parentparent)))) Revenue 1,680 2,020 2,062 2,716 8,477 2,110 2,148 2,248 2,749 9,255 9,678 (44.5%) Operating profit 11 44 7 -20 41 19 12 21 2 54 86 OP margin 0.6 2.2 0.3 -0.7 0.5 0.9 0.6 0.9 0.1 0.6 0.9

SKSKSK Shipping Revenue 630 550 562 603 2,345 522 500 504 652 2,178 2,314 (83.1%) Operating profit 32 15 6 47 100 58 40 38 42 178 185 OP margin 5.0 2.8 1.1 7.8 4.3 11.0 8.0 7.6 6.4 8.2 8.0

Source: KDB Daewoo Securities Research

TableTableTable 777.7. SK BiopharmaceuticalBiopharmaceuticalssss’’’’ major pipeline Current stage Details

Signed out-licensing deal with Jazz Pharmaceuticals (US); Plan to go on sale in 2018 Sleep-wake Will receive engineering fees during clinical disorders Phase 3b clinical trials underway trials (under technology export deal with (SKL-N05) Jazz) and royalties once drug goes on sale Secured copyright in 12 Asian countries; Plans to engage in direct marketing Phase 3b clinical trials expected to begin in 4Q15 Epilepsy Phase 2b clinical trials underway Global release planned for 2018; Direct (YKP3089) Results expected to come out in July revenue (approximately W1tr annually) expected Chronic constipation/ Plans to sign out-licensing deals with global Irritable bowel Phase 2b clinical trials underway drug companies in 1Q16 syndrome (YKP10811) Signed out-licensing in 2010 with Acorda Acute seizures Therapeutics (US supplier of drugs for Submitted NDA (PLUMIAZ) central nervous system disorders) Dementia/ cognitive Conducting phase 2a clinical trials Phase 2a clinical trials underway impairment independently (SKL 15508) Source: KDB Daewoo Securities Research

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November 23, 2015 SK Holdings

TableTableTable 888.8. SK BiopharmaceuticalsBiopharmaceuticals’’’’ consolidated income statement (Wbn) 201120112011 201220122012 201320132013 201420142014

Revenue 37.6 51.8 60.5 72.4 CMS 108.1 113.0 Development of new drugs 10.1 16.1 (adjustment) -57.8 -56.7 Cost of sales 27.4 37.7 44.4 46.6 Gross profit 10.2 14.1 16.1 25.9 SG&A 32.6 50.1 60.2 65.1 Operating profit --- 22.3 ---36.0 ---44.2 ---39.2 OP margin -59.4% -69.5% -73.0% -54.2% CMS 4.7 7.8 OP margin 4.4% 6.9% Development of new drugs -48.9 -46.7 OP margin -484.9% -289.6% (adjustment) 0.1 -0.3 Financial income 4.9 9.2 6.4 6.2 Financial expenses 1.3 1.4 1.9 2.5 Non-operating income 2.6 1.2 0.3 0.6 Non-operating expenses 4.6 3.0 3.2 1.2 Pretax income -20.7 -30.0 -42.6 -36.2 Corporate tax -1.2 0.4 -1.6 0.8 Net profit --- 19.5 ---30.3 ---41.0 ---37.0 Source: Dart, KDB Daewoo Securities Research

Figure 333.3. SK BiopharmaceuticalBiopharmaceutical’’’’ss global peer UCB (UCB BB Figure 222.2. SK GroupGroup’’’’ssss bbbiobio business value chainchainchain Equity)

Tae-won Chey and related persons UCB's financial data (US$mn) 2011 2012 2013 2014 30.9% Revenue 4,519.8 4,451.7 4,161.6 4,442.5 SK C&C+SK Holdings Cost of sales 1,410.5 1,393.9 1,281.8 1,398.9 (034730 KS) Gross profit 3,109.3 3,057.8 2,879.8 3,043.6 100% Operating profit 484.6 537.5 349.3 362.7

OP margin SK Biopharm 10.7% 12.1% 8.4% 8.2% (New drug development) Pretax profit 324.4 338.2 160.7 147.5 Net profit 331.4 320.2 212.5 277.7

100% 100% ($mn,x) EV/EBITD SK Biotech Market cap P/E P/B (Supplies pharmaceutical SKLife Science A ingredients) (US) 2015F 16,752 39.5 2.9 22.4

Source: KDB Daewoo Securities Research Source: Bloomberg, KDB Daewoo Securities Research

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November 23, 2015 SK Holdings

TableTableTable 999.9. Valuation of SK Holdings (Wbn, W) Fair value NotesNotesNotes 1. Operating value 9,828 In-house businesses 7,472 (SK C&C) IT services 6,487 - Based on 2016F EBITDA; applied EV/EBITDA of 18.0x Distribution 456 - Based on 2016F NOPLAT; applied 2015F P/E of 20.0x (Encar) Security services 207 - Based on 2016F EBITDA; applied P/E of 20.0x (Infosec) Other (semicon. modules, 322 - Based on 2016F EBITDA; applied global peer average P/E of 10.9x etc.) Brand royalties - Based on brand royalty rate of 20bps 2,326 (SK Holdings) (contract period: 1/1/ 2015 -12/31/ 2017 Real estate 30 - Investment properties as of 3Q15 (SK Holdings) 2.2.2. Value of investment 12,865 assetsassetsassets Listed subsidiaries 7,800 - 20% discount based on market price Unlisted subsidiaries 5,065 - Book value and relative valuation 3.3.3. Total asset value (1+2)(1+2)(1+2) 22,693 4. Net borrowings (-) 4,697 - As of 3Q15 5. Net asset value 17,996 Number of shares outstanding 55,824 - Outstanding shares (excluding treasury stock) (‘000 shares) NAV per share 322,369 6. Target price 330,000 Current share price 243,000 - As of Nov. 20, 2015 Upside potential 35.8% Source: KDB Daewoo Securities Research

TableTableTable 101010.10 . SK Holdings’ investment securities (Wbn, W) StakeStakeStake Book value Current price Valuation NotesNotesNotes Listed 9,749 --- As ofAs of NovNovNov.Nov ... 202020,20 ,,, 201520152015 subsidiaries SK Innovation 33.40% 3,945 124,000 3,830

SK Telecom 25.20% 3,091 233,000 4,745

SK Networks 39.10% 906 5,900 573

SKC 42.30% 255 36,750 566 SK Securities 10.00% 28 1,140 36 Unlisted 5,065 --- Applied book value subsidiaries SK E&S 100.00% 1,315 3,535 - 2016F P/E of 8.0x

SK Biopharm 100.00% 329 329

SK E&C 44.48% 470 267

SK Shipping 83.08% 421 332

SK Forest 100.00% 61 61 Other 541 541

Source: KDB Daewoo Securities Research

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November 23, 2015 SK Holdings

APPENDIX 1

Important Disclosures & Disclaimers 222-2---YearYear Rating and Target Price History

Company (Code) DateDateDate RatingRatingRating Target Price (W) SK Holdings SK Holdings(034730) 08/30/2015 Buy 330,000 400,000 04/27/2015 Buy 290,000 03/08/2015 Buy 270,000 300,000 03/07/2014 Buy 170,000 02/06/2014 Buy 150,000 200,000 11/01/2013 Buy 140,000 100,000

0 Nov 13 Nov 14 Nov 15

Stock Ratings Industry Ratings Buy : Relative performance of 20% or greater Overweight : Fundamentals are favorable or improving Trading Buy : Relative performance of 10% or greater, but with volatility Neutral : Fundamentals are steady without any material changes Hold : Relative performance of -10% and 10% Underweight : Fundamentals are unfavorable or worsening Sell : Relative performance of -10% Ratings and Target Price History (Share price ( ─), Target price ( ▬), Not covered ( ■), Buy ( ▲), Trading Buy ( ■), Hold ( ●), Sell ( ◆)) * Our investment rating is a guide to the relative return of the stock versus the market over the next 12 months. * Although it is not part of the official ratings at Daewoo Securities, we may call a trading opportunity in case there is a technical or short-term material development. * The target price was determined by the research analyst through valuation methods discussed in this report, in part based on the analyst’s estimate of future earnings. * The achievement of the target price may be impeded by risks related to the subject securities and companies, as well as general market and economic conditions.

Equity Ratings Distribution BuyBuyBuy Trading Buy HoldHoldHold SellSellSell 72.77% 13.86% 13.37% 0.00% * Based on recommendations in the last 12-months (as of September 30, 2015)

Disclosures As of the publication date, Daewoo Securities Co., Ltd and/or its affiliates do not have any special interest with the subjec t company and do not own 1% or more of the subject company's shares outstanding.

Analyst Certification The research analysts who prepared this report (the “Analysts”) are registered with the Korea Financial Investment Association and are subject to Korean securities regulations. They are neither registered as research analysts in any other jurisdiction nor subject to the laws and regulations thereof. Opinions expressed in this publication about the subject securities and companies accurately reflect the personal views of the Analysts primarily responsible for this report. Daewoo Securities Co., Ltd. policy prohibits its Analysts and members of their households from owning securities of any company in the Analyst’s area of coverage, and the Analysts do not serve as an officer, director or advisory board member of the subject companies. Except as otherwise specified herein, the Analysts have not received any compensation or any other benefits from the subject companies in the past 12 months and have not been promised the same in connection with this report. No part of the compensation of the Analysts was, is, or will be directly or indirectly related to the specific recommendations or views contained in this report but, like all employees of Daewoo Securities, the Analysts receive compensation that is impacted by overall firm profitability, which includes revenues from, among other business units, the institutional equities, investment banking, proprietary trading and private client division. At the time of publication of this report, the Analysts do not know or have reason to know of any actual, material conflict of interest of the Analyst or Daewoo Securities Co., Ltd. except as otherwise stated herein.

Disclaimers This report is published by Daewoo Securities Co., Ltd. (“Daewoo”), a broker-dealer registered in the Republic of Korea and a member of the Korea Exchange. Information and opinions contained herein have been compiled from sources believed to be reliable and in good faith, but such information has not been independently verified and Daewoo makes no guarantee, representation or warranty, express or implied, as to the fairness, accuracy, completeness or correctness of the information and opinions contained herein or of any translation into English from the Korean language. If this report is an English translation of a report prepared in the Korean language, the original Korean language report may have been made available to investors in advance of this report. Daewoo, its affiliates and their directors, officers, employees and agents do not accept any liability for any loss arising from the use hereof. This report is for general information purposes only and it is not and should not be construed as an offer or a solicitation of an offer to effect transactions in any securities or other financial instruments. The intended recipients of this report are sophisticated institutional investors who have substantial knowledge of the local business environment, its common practices, laws and accounting principles and no person whose receipt or use of this report would violate any laws and regulations or subject Daewoo and its affiliates to registration or licensing requirements in any jurisdiction should receive or make any use hereof. Information and opinions contained herein are subject to change without notice and no part of this document may be copied or reproduced in any manner or form or redistributed or published, in whole or in part, without the prior written consent of Daewoo. Daewoo, its affiliates and their directors, officers, employees and agents may have long or short positions in any of the subject securities at any time and may make a purchase or sale, or offer to make a purchase or sale, of any such securities or other financial instruments from time to time in the open market or otherwise, in each case either as principals or agents. Daewoo and its affiliates may have had, or may be expecting to enter into, business relationships with the subject companies to provide investment

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November 23, 2015 SK Holdings

banking, market-making or other financial services as are permitted under applicable laws and regulations. The price and value of the investments referred to in this report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide to future performance. Future returns are not guaranteed, and a loss of original capital may occur.

Distribution United Kingdom: This report is being distributed by Daewoo Securities (Europe) Ltd. in the United Kingdom only to (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (ii) high net worth companies and other persons to whom it may lawfully be communicated, falling within Article 49(2)(A) to (E) of the Order (all such persons together being referred to as “Relevant Persons”). This report is directed only at Relevant Persons. Any person who is not a Relevant Person should not act or rely on this report or any of its contents. United States: This report is distributed in the U.S. by Daewoo Securities (America) Inc., a member of FINRA/SIPC, and is only intended for major institutional investors as defined in Rule 15a-6(b)(4) under the U.S. Securities Exchange Act of 1934. All U.S. persons that receive this document by their acceptance thereof represent and warrant that they are a major institutional investor and have not received this report under any express or implied understanding that they will direct commission income to Daewoo or its affiliates. Any U.S. recipient of this document wishing to effect a transaction in any securities discussed herein should contact and place orders with Daewoo Securities (America) Inc., which accepts responsibility for the contents of this report in the U.S. The securities described in this report may not have been registered under the U.S. Securities Act of 1933, as amended, and, in such case, may not be offered or sold in the U.S. or to U.S. persons absent registration or an applicable exemption from the registration requirements. Hong Kong: This document has been approved for distribution in Hong Kong by Daewoo Securities (Hong Kong) Ltd., which is regulated by the Hong Kong Securities and Futures Commission. The contents of this report have not been reviewed by any regulatory authority in Hong Kong. This report is for distribution only to professional investors within the meaning of Part I of Schedule 1 to the Securities and Futures Ordinance of Hong Kong (Cap. 571, Laws of Hong Kong) and any rules made thereunder and may not be redistributed in whole or in part in Hong Kong to any person. All Other Jurisdictions: Customers in all other countries who wish to effect a transaction in any securities referenced in this report should contact Daewoo or its affiliates only if distribution to or use by such customer of this report would not violate applicable laws and regulations and not subject Daewoo and its affiliates to any registration or licensing requirement within such jurisdiction.

KDB Daewoo Securities International Network

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